TWA RECEIVES ANALYSTS' SUPPORT FOR "PREPACKAGED' REORGANIZATION PLAN

TWA RECEIVES ANALYSTS' SUPPORT FOR "PREPACKAGED' REORGANIZATION PLAN

Trans World Airlines Inc.'s decision to file for bankruptcy protection and simultaneously announce a reorganization plan with its creditors won early support from industry analysts.

They praised the move Friday in the belief that it will allow TWA to stay afloat until the economy emerges from recession."Realistically, it buys some time," said John Pincavage, partner in Transportation Group, a New York consulting firm.

TWA, seeking to cut its debt load, had said last year that it was in talks with its creditors and would file a "prepackaged" bankruptcy when the negotiations were completed.

Under such a plan, a company works out terms for a reorganization before filing for bankruptcy. That usually speeds up the reorganization process

because the company and its creditors have already resolved most conflicts over the value of assets.

Carl Icahn, TWA chairman, said the plan will cut TWA's debt load by $1 billion and reduce annual interest costs by $150 million.

"I am confident that the reorganization, combined with prior cost savings, will result in a stronger, more competitive airline," Mr. Icahn said in a statement.

"The conduct of TWA's normal business affairs will in no way be affected by the filing," he added.

The airline also said it reached a labor agreement with the International Association of Machinists, the union that represents about one-half of its employees.

Suffering from the recession and increasing international competition, TWA has been seeking to reduce costs associated with its 1985 takeover by Mr. Icahn. The financier took over the company in 1985 after a bitter contest with Frank Lorenzo, then-Texas Air Corp. chairman.

Mr. Icahn bought all the shares in a 1986 leveraged buy-out and currently holds 90 percent of the company.

TWA did not say Friday what stake Mr. Icahn would retain. Mark Buckstein, a TWA attorney, said last July that Mr. Icahn would have to give up anywhere

from 45 percent to 70 percent of his shares as part of a reorganization.

Analysts said that with $500 million of cash and an additional $100 million expected from the proposed sale of its Philadelphia-London and Baltimore-London routes to USAir Group, TWA was in a good position to convince creditors a prepackaged filing was the best strategy.

"Other airlines didn't have the cash or the wherewithal to facilitate something like this," Mr. Pincavage of The Transportation Group said.

"These days, you can't file for bankruptcy unless you have the money," said L. John Eichner, president of SH&E, a New York consulting firm.

The filing is just the latest of woes for the U.S. airline industry, which saw three major carriers disappear from the skies in the past year. Pan American World Airways, Eastern Airlines and Midway Airlines all shut down after failing to emerge successfully from their own bankruptcy filings.

Two other major airlines, Houston-based Continental Airlines Holdings Corp. and America West Airlines Inc. of Phoenix are currently in bankruptcy protection.